German reform package offers glimmer of hope

GERMAN REFORM PACKAGE OFFERS GLIMMER OF HOPE

After being unceremoniously dumped out of the World Cup by Paraguay, Germany finally has something to cheer.

It might not be as glamorous as the Jules Rimet trophy but Germany's ruling coalition has finally unveiled a package of reforms that analysts believe can get the stuttering economy back on the right track.

Here's ING: "It is not a package that will morph a stagnating economy into a booming economy overnight. But it is a package that could create the preconditions, the framework, for future growth."

Measures include pension changes, more affordable housing and tax relief for lower-income earners.

Commerzbank says the extent to which the measures will help the economy will depend on their implementation.

For markets, Deutsche Bank believes it will take time for the measures to have an impact.

"Global investors have barely taken notice," they say.

Nevertheless, the German-based bank is still overweight German equities.

"With energy prices being back to pre-Iran war levels, investor attention moving away from the Iran war and proof of the much-needed reforms actually happening, we reiterate our call to be overweight German equities," they write.

"We see the biggest upside in German Mid and Small Caps, especially in direct beneficiaries of the fiscal stimuli into German infrastructure."

"We have seen exuberance, disappointment and exuberance on the Germany story again and again over the past 18 months. We don’t view this as a short-term trade but rather as an investment opportunity for longer-term investors."